How to Buy Stocks: A Beginner’s Guide to Investing in the Stock Market

How to Buy Stocks?

The process of investing and starting to buy stocks seems complicated but it is not with Rabee Securities. As a start, it is highly recommended to read as much as possible and watch the sources of information available about the Iraq Stock Exchange. We provide you at Rabee Securities with these sources on our website and our media accounts including Facebook, Instagram and YouTube channel.

Where to Buy Stocks?

It is important to go to a reliable broker to open a trading account. To find a broker, you can visit the official website of the Iraq Stock Exchange and view the list of brokers. There are many brokerage companies that can be dealt with, but it is always preferable to deal with one who has a good reputation and customer service that is constantly available to answer inquiries. The investor can choose the broker that suits him to buy stocks. 

 

Buying Stocks with Broker

The investors need to open a trading account with a broker to obtain a unique trading number, which will belong solely to them and will be used later by traders for buying and selling orders.

After the account opening, investors should carefully determine the amount they intend to use for purchasing shares. It is advisable not to allocate funds designed for daily expenses, as share prices are subject to fluctuation. Using essential funds for investments can be risky and may lead to financial strain if market conditions shift unexpectedly.

The next step for investors is to decide which shares to buy. It is crucial to choose the company carefully through reading and reviewing the company’s financial statements. Rabee Securities publishes comprehensive company reports including objective analysis of the financial statements to make it easier for its clients to analyze the companies. Please visit RS-Company Reports in RS Website to view all the company reports written by RS. (Please note, only RS clients can open the reports). While deciding which shares to buy comparing it with in its sector with other similar companies based on its Price to Earning and Price to Book ratios (standardized ratios enabling to compare companies that have different share prices) might give an idea if it is trading at a lower price than its peers or not.

Additionally, the company’s liquidity (average daily trading volume) must be considered, as it is essential for ensuring that the purchased shares can be sold with the same ease as they were bought.

 

How do you calculate how many shares you can buy with your investment amount? 

 

The broker’s commission is deducted from the purchase amount and then divided by the specified share price

For example:

Amount allocated to purchase Company X shares: IQD 1,000,000 

Share Price of Company X= 1.500 IQD

The broker’s commission: 0.6% of the purchase amount (deducted first)

 

Steps to Calculate How Many Shares That You Can Buy from Company X 

 

(Please note, RABEE APP calculates the number of shares that you can buy for you. Below calculations are people who do not use the RABEE APP) (To Download the App Please click HERE for Android and for IOS)

 

• First Step – Deduct Broker’s Commission (=IQD1,000,000 X 0.6% = IQD6,000)
• Second Step – Calculate Net Purchasing Amount: (=IQD1,000,000 – IQD6,000 = IQD994,000) 
• Third Step – Calculate The Number of Shares That You Can Buy: (=IQD994,000 / IQD1.500 = 662,666 shares). 

 

Please note, you can specify the purchase price for the share or choose the market price when entering purchase orders, but it is always preferable to specify the price as selecting the market price means buying at the current market rate, which may be high at that moment.

• If you are using the RABEE APP (Android and IOS) and have decided on a price at which to buy (preferably lower than the market price) or sell (preferably higher than the market price), the RABEE APP (Android and IOS)  will calculate how many shares you can trade with the amount you wish to invest.

Buying Stocks Online

You can buy shares directly by contacting our traders and sending an email or using the RABEE APP (Androind and IOS). 

Please click HERE to watch our video to learn how to enter purchase orders using the RABEE APP (Androind and IOS). This also requires that you have a trading account first to be able to use our app. 

The Benefits of Using The RABEE APP: 

• RABEE APP allows investors to send buy and sell orders directly. 
• Orders can be sent at any time of day and are executed when the trading session begins.
• The app’s available payment processes reduce the time required for money transfers, offering multiple payment methods for an efficient and seamless trading experience).

 

How to Monitor and Analyze Stock Performance?

 

When you buy a share, it is always better to set a target price at the beginning of the purchase (or an expected rate of return) and be ready to sell it when the stock reaches that price, thus you can look for other stocks that have the potential to bring higher returns. Analyzing price charts might help to see the trend in the share price, if it is in an upward or downward trend. You can follow price charts which include comparisons to Rabee’s ISX Index, RSISX Index which helps to show if a stock is trading below or above the index. Please click HERE to go to our website allowing us to compare three companies at the same time in one chart with the RSISX Index. Comparing similar stocks between each other might help while building new investment decisions. 

 

While monitoring the stock price movements, it is important to understand the reasons behind the price fluctuations to feel comfortable while waiting for the stock to reach your target price. While following the possible effects on share prices, Rabee is making it easier for its investors by providing information through its RABEE APP, RS Website, and media accounts: Facebook and Instagram. Rabee provides news and financial reports on ISX-listed companies, summary analysis of the financial statements in the same day when they announce new financial results, as well as the financial ratios that help in building investment decisions, such as Price to Earning (P/E) & Price to Book (P/B), and Return on Average Equity (ROAE) & Return on Average Assets (ROAA) ratios. 

An investor should follow the official websites that publish any material events related to listed companies, as well as any news that may cause a change in a specific company or sector. Iraq Stock Exchange (ISX) and Iraqi Securities Commission (ISC) are the official websites in Iraq regarding the stock market.

To make timely investment decisions, investors should monitor the market (on a daily, weekly or monthly basis depending on their preferences) and their investment portfolio to stay informed and react to events that may affect their portfolio’s value. Rabee Securities keeps its clients updated on all market developments to help them to make timely investment decisions.

 

FAQ Regarding How to Buy Stocks in ISX

 

• Which stock is best for beginners?

When investors are uncertain about which stock to buy, a common tendency is to try to mimic the performance of the benchmark index. Thus, investing in the companies within the index, which have been selected to reflect the market better, can be a good starting point

 

• Is it hard to buy stocks?

Buying stocks is so easy through our RABEE App. All you need to do is downloading the app, opening a trading account and transfer money. 

 

• Can I buy stock and never sell?

You can buy a stock and keep it indefinitely as a long-term investment, with the belief that the company’s value will increase over time.

 

• What is the safest stock to buy?

First, there are no entirely risk-free investments in the stock market. When considering the safest stocks, we can choose those from sectors that have historically shown greater stability and steady demand. Investing in large, steadily growing companies that also pay regular dividends (Blue-chip companies) can be safer than investing in smaller, fast-growing companies. Blue-chip companies are leaders in their industries with a strong reputation and are considered safe and stable investments due to their financial strength.

 

• Is now a good time to buy stocks?

There may be optimal times to buy stocks, but this depends largely on the strategy the investor intends to follow. A speculator, for example, may prefer to buy during periods of low prices. On the other hand, a long-term investor, typically analyzes the company’s data and looks for attractive financial ratios, such as the P/E ratio, to determine which company to invest in.  In short, for long-term investors, downturns can be opportunities to buy quality stocks at lower prices, while for short-term investors, timing is more critical, so following the current market outlook and broader economic indicators is more crucial. 

 

• Can I buy stocks on my own, without a broker?

   

In Iraq, direct stock trading is only possible through a licensed brokerage firm, as only brokerage companies are authorized to trade on the stock exchange on behalf of their clients. Brokers facilitate the buying and selling process and provide useful analyses and guidance to investors to ensure that their investment portfolios are managed properly, in addition that the licensed traders are familiar with all the conditions and instructions issued by the regulatory authorities that must be taken into account when executing orders to ensure that no violations are committed that would expose the brokerage firm or the investor to accountability.

 

• How much money do I need to buy stocks?

You can start with a small amount, such as 500,000 IQD, but the more you invest, the greater your opportunities for diversification and risk reduction. It is also important to have a clear plan, then you can gradually increase your investment as you gain a clearer understanding of market movements.

 

• How many stocks should I buy?

The number of stocks you should buy depends on your investment goals and the size of your portfolio.